Dell may go private? The company continues to fight for survival in a sector that is losing market share to tablets and other devices. The report from Bloomberg that they are in talks with a private equity firm sent the shares up more than 12% on Monday. Getting that size of a deal done would take plenty of work and effort on the part of all involved. The move helped the technology sector offset some of the negative sentiment from Apple was down 3.5%. The interesting part of the two events is that Apple gave up $17 billion in market cap which is almost the $19 billion it would take to make Dell a private company.
Speaking of Apple… several analyst came out with comments that Apple was oversold and that the valuation was cheap. There was the defense that the supply news, was old news. If it is, it still made an impact on the value of the stock showing current sentiment. While it may be true that Apple looks cheap, attempting to catch a falling knife is never a good idea. Thus, let it find support or a bottom first, and then negotiate if you want to own the stock.
Sticking with the technology sector Hewlett-Packard received an upgrade on Monday pushing the stock up nearly 6%. Since we have a position in the stock that was a plus! I continue to like the stock long term and we are evaluating the move higher and how we want to deal with our position. The re-positioning story continues to unfold, and the upside will remain in play for the near term.
The technology sector remains a topic of choice to start the trading week for investors. Facebook has a media event today that shook the stock on Monday losing 2.4%. However, it isn’t going to stop the advance, analyst say, looking forward. Either way it promises to be an interesting day for FB. Intel, Cisco and others were upgraded on Monday as well adding to the parade of data from the sector. Despite all the news, XLK fell 0.6% in trading. Apple was part of the issue, but there is worry overall about earnings. This is becoming a stock picking sector going forward. We continue to monitor our positions in XLK and other technology related holding.
Retail remains a mess with JC Penny’s announcing a 30% drop in holiday sales store comps. Is this a sign of things to come for the sector? Throw in the tax increase for the new year and we may see more downside in the sector overall. Watch for a potential test of the $61 level on XRT, SPDR Retail ETF. The overall sector of Consumer Services (XLY) in contrast has continued to move higher. Watch both going forward as this all unfolds into earnings. Throw in that the retail sales news is out today for December and this get more interesting.
Small and Midcap stocks have led the upside on the current move and they will be key if the next leg higher is to unfold accordingly. They have held their respective moves of late and continue trade at new highs. However, they are stuck at their new highs along with other key indexes. Look for a decisive move higher in both indexes if the trend higher is to continue.
The debt ceiling talks are starting to creep into the headlines. Geithner issued a letter stating we will hit the ceiling in mid February to early March time frame. Thus, the battle begins. The President spoke on the topic in a press conference on Monday as well. For now the markets remain calm on the topic, but with a 4-6 week window this could heat up quickly for investors.
Earnings will continue to roll out in bunches and the key for you and I is position management. Each position will act and react to the surrounding news and events. Use your stops wisely, don’t assume and most importantly plan before the announcements relative to specific stocks. Money management is risk management! The upside is as difficult to manage as the downside of the market. In some ways it is more difficult as the emotion of greed steps in. Stay focused and disciplined as the news parade continues.